|THE YEAR AHEAD—KEY TRENDS FOR 2021
Five themes we’ll be watching across the coming year.
Getting through—and past—the COVID pandemic
With more than 21.6M cases reported in the US, more than 132,000 Americans currently hospitalized with COVID-19, and more than 365,000 lives lost to the disease, there is little doubt that the pandemic will continue to be the most important factor driving events in 2021 for some time to come. Just yesterday, a record 4,100 deaths were recorded in the US, and a holiday surge is set to drive hospitalizations and deaths higher in coming weeks. Meanwhile a new, more transmissible variant of the virus has surfaced in several states. It will indeed, as President-elect Biden has said, be a dark winter. The rollout of two highly effective vaccines, however, with others likely to be approved in the near future, means that an end to the COVID pandemic is in sight.
Two questions will be top of mind for us in the months to come. First, how much worse will the strain on hospital capacity—beds, equipment, and most of all healthcare workers—get? We’d anticipate the situation to get worse before it gets better, with many other markets experiencing the same critical challenges currently being felt in Southern California. Our nation’s healthcare system will need urgent support—financial, logistical, operational—to weather the difficult days ahead. Second, where will the true bottlenecks in vaccine distribution lie? Right now, the “last mile” is clearly the problem, with health systems forced to step in and assume much of the burden of vaccinating the population in place of underfunded public health resources. Soon enough, however, there will be plenty of places to get vaccinated (retail pharmacies, grocery stores, mass vaccination sites), and plenty of vaccines to go around. (Just today, the incoming Biden administration announced a “first vaccines first” policy.) We’d expect the ultimate challenge to be demand, not supply—overcoming vaccine skepticism, mobilizing vulnerable populations, and convincing a fatigued and disengaged public to get the shot(s). There’s a real danger that we’ll stall at 80-100M Americans vaccinated later this year, once we’ve gotten through all those who can be easily reached. That’s nowhere near enough to achieve the kind of immunity we need to end the pandemic. Much of 2021 will need to be spent on a massive public education effort to make sure we don’t fall short. These twin challenges—sustaining our health system and ensuring a successful vaccine rollout—are related. The sooner we can reduce reliance on hospitals as the nexus of vaccine distribution, and the go-to resource for vaccine education—the better off we’ll be, allowing health systems to devote full attention and resources to helping us recover from this deadly virus.
Entering the Biden era of healthcare policy
We are now 12 days away from a presidential transition, after one of the most fraught political seasons in our nation’s history. The incoming Biden administration will enjoy Democratic control—albeit narrow—of both the House and Senate, making it possible for the new President to advance his policy agenda in healthcare and other areas. We’d expect the first months of the year to be focused almost exclusively on COVID response and economic stimulus, starting with the implementation of a mass distribution and education campaign to ensure successful rollout of vaccines, coupled with more robust federal support for public health measures to combat the virus. In Congress, the first priority will likely be increased funding to states and municipalities, along with more economic relief for individuals and small businesses. While there was much discussion of sweeping healthcare reforms during the campaign, and President-elect Biden voiced support for a national “public option” insurance plan and the expansion of Medicare eligibility to those over 60, we think it’s overwhelmingly unlikely that either of those more expansive reforms make their way into law. Rather, we’d expect the Biden administration to pursue incremental improvements to the Affordable Care Act (ACA), while protecting the 2010 law against the improbable event of a Supreme Court ruling to overturn it entirely.
Any hopes of bolder reforms will face the twin challenges of having to use “budget reconciliation” to get legislation through a 50-50 Senate, and crafting legislation that can gain the support of all 50 Democratic senators. Substantive legislative action, in other words, will require a Sanders-Manchin compromise—no easy feat. Instead, look for regulatory activity to drive the Biden healthcare agenda—dialing back Medicaid work requirements, using waivers to allow states to experiment with single-payer coverage, continuing the Obama administration’s focus on reducing the cost of care through value-based payment, and seeking to address the racial disparities in care that events in 2020 laid bare. One key area of regulatory focus in 2021: filling in the implementation details of the surprise billing ban that passed Congress at the end of last year. Beyond COVID response and relief, however, we may be entering a period of relative calm on the healthcare policy front—at last.